Soile Varis - A Concise History of Finland: the 11th to the 21th Century

Kekkonen was re-elected as the president in 1978, but he lost his health and resigned in 1981. President Mauno Koivisto continued managing the relationships with the eastern neighbor along the principles earlier defined by Paasikivi and Kekkonen. The YYA Treaty was extended 20 years.

The parliamentary system was enforced during Koivisto's tenure. The National Coalition Party, which was denied a part in the government when Kekkonen was president, could now join the government. The electoral system of presidential elections was changed to direct vote, and the period in office was limited to two six-year terms.

President Mauno Koivisto (1923 -).

During President Martti Ahtisaari's tenure, Finland joined the EU. A new constitution was approved in 2000. The President's domestic and foreign policy authority was further limited in the new constitution. Following Ahtisaari, Tarja Halonen was twice elected as the president. In 2012, Sauli Niinist won the presidential election.

In the mid-1980s, Mikhail Gorbashev was appointed the leader of the Soviet Union. He pushed open and reformative politics. The Soviet Union recognized Finland's neutrality in 1989.

When Eastern Europe's socialist regimes collapsed and Germany was united, President Koivisto announced that Finland would alter the terms of the Paris peace treaty that restricted Finland's military forces. In 1991, the Soviet Union collapsed, making the YYA Treaty redundant. Finland and Russia signed a collaboration agreement without a requirement for mutual assistance in 1992. The cold war was over for Finland.

The Soviet Union had allowed Finland to join the Council of Europe. The collapse of communism enabled European states to integrate their political and economical initiatives, allowing Finland to join the integration development as well.

Nine member states of the European Community signed the Maastricht Treaty, adopting the name European Union. An advisory national referendum was organized, after which Finland joined the EU in 1995. The period of neutrality policy was over when Finland committed to a common foreign and security policy. Finland became a member of the EMU (Economic and Monetary Union) in 1998, and four years later, Finnish Marks were changed to Euros.

During the 1980s, a strong economic boom swept through Finland. Capital markets had been liberated, allowing enterprises, banks, and citizens to run into debt. Characteristic for the period was the so called casino-economy, meaning high risk taking, high employment, high salaries, strong consumer demand, and the growth of state taxes.

The boom ended in the early 1990s, when the global recession hit Finland. After the collapse of the Soviet Union, the trade with that eastern neighbor ceased as well. Banks and enterprises had problems with their debt payments, forcing many of them into bankruptcies. Unemployment reached high numbers. The state debt increased, social security benefits were cut down, equalization of incomes was reconsidered, and taxes were raised.